State closing down the PUP Medicare Advantage plan

Published: Wednesday, June 11, 2014 at 11:45 a.m.

Last Modified: Wednesday, June 11, 2014 at 11:45 a.m.

Physicians United Plan, a Medicare Advantage plan with more than 6,200 members in Marion County, is in the process of being closed.

A circuit judge in Leon County has approved having the state take over the plan and liquidate it. State officials said the plan is insolvent.

The Florida Department of Financial Services is the court-appointed receiver of PUP. The state agency said the PUP Medicare Advantage plan has about 38,000 members in 14 counties statewide. Only Polk and Orange counties have more enrollees than Marion.

Company officials did not return calls for this story.

Plan members will go into original Medicare and be assigned to a Medicare Part D prescription drug plan once PUP ends, according to officials from the federal Centers for Medicare and Medicaid Services.

Closing is expected to happen by July 1.

The plan members will be able to enroll in another Medicare Advantage plan and/or another Part D plan during the annual Medicare open enrollment, which runs from Oct. 15 to Dec. 7, if they don't want to remain in original Medicare and the Part D plan they are put in.

The Centers for Medicare and Medicaid Services also has the option of holding a special enrollment period to let the members get into other plans more quickly.

Former PUP clients can contact the Centers for Medicare and Medicaid Services at 1-800-633-4227 for help switching and more information about all their options.

"I had a call on Monday from my doctor's office that they were canceling my appointment because PUP went bankrupt," Nierode said. "I have neuropathy (in my feet) … I need to see the doctor."

The homemaker and retired secretary said she feels abandoned by PUP and doesn't know what to do next or how to get health care coverage.

"I had an appointment with the neurologist" today that was canceled. I've been seeing him for 15 years," she said. "I don't know what I'm supposed to do now.

"The state should tell us what Medicare they're going to put us in," Nierode said during a telephone interview with the Star-Banner.

As recently as February, PUP was publicizing itself as the fastest growing health plan in the state. But PUP signed an agreement in April in which its directors admitted that, unless it got an infusion of $30 million by noon on June 3, grounds would exist for appointing the Department of Financial Services to rehabilitate or liquidate it.

PUP notified the state on May 8 it would be getting that capital. A financial statement the state received on May 27, however, showed PUP with a deficit of almost $13 million, according to an affidavit by the director of life and health financial oversight for the Office of Insurance Regulation.

On June 3, PUP said it wouldn't be able to get the money, thus triggering the state's motion to move toward liquidating the plan.

Health plan analyst Allan Baumgarten told the Star-Banner he was not surprised that the Medicare Advantage company was under state receivership; the only question was why it took so long for the state to take this action.

For years the company was warned by state regulators that it did not have the capital it needed to meet Florida health plan standards, he said.

He said Physicians United was representative of the many private Medicare plans that had to be taken over by the state during the 2000s.

"They were chronically undercapitalized … and based on their record of losses, their management was not that strong," he said of PUP.

"(The Florida of Office Insurance Regulation) has a formula that it applies, and I know that at least for the past five years Physicians United did not have enough capital to meet the formula," he said.

Some of the Medicare plans were put together on a "build and sell strategy," where company founders' goals were to enroll as many clients as possible and then sell their plans to a larger Medicare provider.

Medicare plans such as Medicare Advantage were allowed by the Medicare Modernization Act of 2003. The law allows Medicare recipients to forgo traditional Medicare and sign onto privately administered Medicare plans. The plans allow recipients to save money when receiving health care, but they usually limit recipients to a network of providers. Recipients typically see significant cost increases by venturing outside the network.

"There's been a very mixed record of services and appropriateness for the services they provide," said Aaron Liberman, a recently retired professor from the University of Central Florida's Department of Health Management & Informatics.

He said there is often confusion among Medicare recipients about the different plans available to them, and some Medicare Advantage simply fail as businesses.

But Medicare plans such as Medicare Advantage can be good for people in relative good health who do not travel much. That is because in order for Advantage plans to make a profit, they often limit the services they cover or strictly limit the doctors that patients can visit.

Liberman said that, for the most part, Medicare Advantage plans strive to offer a good health care product and that "rampant dishonesty was not a problem at all."

<p>Physicians United Plan, a Medicare Advantage plan with more than 6,200 members in Marion County, is in the process of being closed.</p><p>A circuit judge in Leon County has approved having the state take over the plan and liquidate it. State officials said the plan is insolvent.</p><p>The Florida Department of Financial Services is the court-appointed receiver of PUP. The state agency said the PUP Medicare Advantage plan has about 38,000 members in 14 counties statewide. Only Polk and Orange counties have more enrollees than Marion.</p><p>Company officials did not return calls for this story.</p><p>Plan members will go into original Medicare and be assigned to a Medicare Part D prescription drug plan once PUP ends, according to officials from the federal Centers for Medicare and Medicaid Services.</p><p>Closing is expected to happen by July 1.</p><p>The plan members will be able to enroll in another Medicare Advantage plan and/or another Part D plan during the annual Medicare open enrollment, which runs from Oct. 15 to Dec. 7, if they don't want to remain in original Medicare and the Part D plan they are put in.</p><p>The Centers for Medicare and Medicaid Services also has the option of holding a special enrollment period to let the members get into other plans more quickly.</p><p>Former PUP clients can contact the Centers for Medicare and Medicaid Services at 1-800-633-4227 for help switching and more information about all their options.</p><p>Behind the legal maneuvers and statistics are ordinary Marion County residents like 85-year-old PUP client Eileen Nierode.</p><p>"I had a call on Monday from my doctor's office that they were canceling my appointment because PUP went bankrupt," Nierode said. "I have neuropathy (in my feet) … I need to see the doctor."</p><p>The homemaker and retired secretary said she feels abandoned by PUP and doesn't know what to do next or how to get health care coverage.</p><p>"I had an appointment with the neurologist" today that was canceled. I've been seeing him for 15 years," she said. "I don't know what I'm supposed to do now.</p><p>"The state should tell us what Medicare they're going to put us in," Nierode said during a telephone interview with the Star-Banner.</p><p>As recently as February, PUP was publicizing itself as the fastest growing health plan in the state. But PUP signed an agreement in April in which its directors admitted that, unless it got an infusion of $30 million by noon on June 3, grounds would exist for appointing the Department of Financial Services to rehabilitate or liquidate it.</p><p>PUP notified the state on May 8 it would be getting that capital. A financial statement the state received on May 27, however, showed PUP with a deficit of almost $13 million, according to an affidavit by the director of life and health financial oversight for the Office of Insurance Regulation.</p><p>On June 3, PUP said it wouldn't be able to get the money, thus triggering the state's motion to move toward liquidating the plan.</p><p>Health plan analyst Allan Baumgarten told the Star-Banner he was not surprised that the Medicare Advantage company was under state receivership; the only question was why it took so long for the state to take this action.</p><p>For years the company was warned by state regulators that it did not have the capital it needed to meet Florida health plan standards, he said.</p><p>He said Physicians United was representative of the many private Medicare plans that had to be taken over by the state during the 2000s.</p><p>"They were chronically undercapitalized … and based on their record of losses, their management was not that strong," he said of PUP.</p><p>"(The Florida of Office Insurance Regulation) has a formula that it applies, and I know that at least for the past five years Physicians United did not have enough capital to meet the formula," he said.</p><p>Some of the Medicare plans were put together on a "build and sell strategy," where company founders' goals were to enroll as many clients as possible and then sell their plans to a larger Medicare provider.</p><p>Minnesota-based Baumgarten publishes twice annually his Florida Health Market Review, a detailed review of the health care market.</p><p>Medicare plans such as Medicare Advantage were allowed by the Medicare Modernization Act of 2003. The law allows Medicare recipients to forgo traditional Medicare and sign onto privately administered Medicare plans. The plans allow recipients to save money when receiving health care, but they usually limit recipients to a network of providers. Recipients typically see significant cost increases by venturing outside the network.</p><p>"There's been a very mixed record of services and appropriateness for the services they provide," said Aaron Liberman, a recently retired professor from the University of Central Florida's Department of Health Management & Informatics.</p><p>He said there is often confusion among Medicare recipients about the different plans available to them, and some Medicare Advantage simply fail as businesses.</p><p>But Medicare plans such as Medicare Advantage can be good for people in relative good health who do not travel much. That is because in order for Advantage plans to make a profit, they often limit the services they cover or strictly limit the doctors that patients can visit.</p><p>Liberman said that, for the most part, Medicare Advantage plans strive to offer a good health care product and that "rampant dishonesty was not a problem at all."</p><p><i>Staff writer Fred Hiers contributed to this report.</i></p>